Financial services industry embracing social media channels

Updated: November 10, 2009

Young customers today expect financial institutions to communicate using social media or online outlets. This is the conclusion drawn from a survey conducted by KRC Research that queried on what steps banks could take to regain customers' trust.

The trust of young customers in banks and other financial services firms went for a tailspin ever since the economic crisis worsened late last year, which culminated in the bailout of AIG and other banks. Thereafter, financial services firms are seeking ways to overcome this distrust and use technology solutions to build lasting relationship with their young customers.

One way is the use of online blogs, wherein customers pose questions and bank executives reply to them. Other technologies that improve communication between banks and their customers include social networking, two-way blogs, and micro-blogging sites like Twitter. Other communication channels that banks can use are monthly e-mail updates, online live chat with staff, a personal web portal, text message updates, webcasts, podcasts, and financial applications for smart-phones.

Banks can use social media for product research by getting insights into customers' needs and opinion of their services. Banks can then bring improvements in their products accordingly. They can also use social media channels for customer service, marketing, and promotion. In the long term, the increased transparency that these channels foster helps enhance public trust in banks.

In adopting these tools, banks also need to adapt some social media culture and its offerings into their own marketing and communications plans.

Twitter: Customer interaction and information sharing tool for financial institutions

To go into the details, it`s worth to say that Financial Institutions deem certain information to be vital for sharing through social media tools such as Twitter, for better marketing and service. Irrespective of the geographic region, population level, and organizational type, financial organizations are using Twitter for interacting with their customers. It is observed by industry analysts that individual accounts are more frequently updated than others because they have a far more personalized and casual pitch.

Information that is most frequently shared on Twitter is related to new products or promotions, links or comments on financial industry news, tips on maintaining personal financial portfolio, links to media coverage, and conversations with followers. Generally financial institutions mould their Twitter accounts towards members or regular community readers.

Many financial institutions also use Twitter as an online customer service platform. They identify negative experiences and try to proactively address concerns of unhappy customers. In fact, customers can also post their queries or issues on these sites, subsequently expecting immediate assistance. Since marketing through social media networks requires constant image building, financial institutions are prompt in addressing the requirement, hence proving to be an advantage for the customers.

The usage of Twitter has grown substantially over the past few months. An in-depth analysis of the content posted by financial institutions on Twitter can eventually prove to be beneficial for several industry areas. For example, technology and service providers can use Twitter as a tool to identify topics of interest and products promoted by financial institutions to their customers. Providers can then tailor their financial products according to the need and interests of the consumers.

The reason for this trend might be also the attempt to

bridge the gap between millennials and baby boomers.

In a study called Millennials and Baby Boomers Banking Channel Preference Survey 2009 conducted by Microsoft Corp, it was found that generation gap will affect the way in which consumers will bank. Hence, financial institutions will need to get accustomed to the diverse needs of their customers.

It was found that adult millennials (ages 18-29) and baby boomers (ages 45-63) favor diverse channels for their banking activities. Some prefer high-touch, in-person experiences at the branch while some prefer automated experiences at the web, kiosks or on mobile phones. Banks are trying to create new offerings through online and mobile channels to catch the attention of millennials, who are the next generation of customers.

Official press release touches on...

Technology Key to Bridging the Gap Between Millennials' and Baby Boomers' Banking Needs, Reports Microsoft Study

BOSTON - Nov. 3, 2009 - As retail banks struggle to recapture customers in the wake of the global economic crisis, emerging generational differences in the way consumers wish to bank will require financial institutions to adapt to the divergent needs of their customers, reports a study released today by Microsoft Corp. at the BAI Retail Delivery Conference & Expo.

The Microsoft "Millennials and Baby Boomers Banking Channel Preference Survey 2009," conducted by Washington, D.C.-based KRC Research, found that adult millennials (ages 18-29) and baby boomers (ages 45-63) prefer very different channels for their banking activities. These preferences vary from high-touch, in-person experiences at the branch to more automated experiences on the Web, on mobile phones or at interactive kiosks.

"Generational differences are a challenge for banks as they try to create consistently positive, integrated banking experiences, regardless of channel," said Colleen Healy, general manager, U.S. Financial Services, Microsoft. "Banks are building loyalty with boomers today primarily through in-person retail branch interactions, while creating new offerings via online and mobile channels to attract millennials, the next generation of customers. Microsoft is focused on helping banks create this seamless, connected experience across multiple screens and channels, tied together through cloud computing."

Varying Channel Preferences

The Microsoft study shows that different generational groups of respondents have very different preferences for conducting banking transactions. Millennials represent an untapped customer base for banks, but they have specific high-tech needs in terms of how they communicate and network with their financial institutions. For example, they are much more likely than baby boomers to use Web banking (49 percent versus 35 percent) and to find online service capabilities to be very important when researching a new bank (54 percent versus 42 percent).

Baby boomers, on the other hand, are much more likely to prefer banking transactions in person at a branch (44 percent versus 32 percent), and half (50 percent) report that they never bank via the Web using a personal computer or phone browser.

Millennials and Baby Boomers Find Common Ground on Bank Criteria

While generational gaps in banking channel preference exist, both millennials and boomers found similarities in their criteria for choosing a new bank. Customer service ranked as the highest priority for both millennials and boomers (98 percent versus 96 percent), followed by rates and fees (97 percent versus 96 percent) and superior security against identify fraud (96 percent versus 95 percent). Also ranking high were access to bank retail branches (95 percent versus 94 percent) and insurance on deposit accounts (92 percent versus 92 percent).

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